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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Saturday, 20 November 10
ITALIAN STEAM COAL MARKET HAS RECOVERED - ITALIAN COAL ASSOCIATION
Press Release - This year Italy will import 17 million tons of steam coal, up 3% from 2009, and 5.5 million tons of coking coal and PCI, up 37% over ...
Friday, 19 November 10
WE'LL THINK ABOUT COAL TOMORROW - ANALYSIS
The future of coal generation in Russia is in question. The largest energy companies have abandoned their initial plans to switch their therma ...
Friday, 19 November 10
DRY BULK MARKET ON THE ROPES WITH BDI PLUNGING TO 2,164 POINTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the panamax markets suffering the most this week, but a ray of hope for the capesize market, which appears to be stabilizing after days of fall ...
Thursday, 18 November 10
WORLD COAL ASSOCIATION WELCOMES NEW CHAIRMAN & SHENHUA GROUP AS NEW MEMBER 17 NOVEMBER 2010
Press Release – The premier global coal industry association marks its 25th anniversary with a new Chairman and welcomes China’s lar ...
Thursday, 18 November 10
MUNDRA PORT AWARDED BEST PRIVATE PORT - COMMODITY ONLINE / HELLENIC SHIPPING
Adani Group owned, Mundra Port has been awarded the Annual Indian Maritime Gateway Award for the Best Private Port of the Year for the third consecu ...
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- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Simpson Spence & Young - Indonesia
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Jindal Steel & Power Ltd - India
- Kumho Petrochemical, South Korea
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Petron Corporation, Philippines
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Mercuria Energy - Indonesia
- Makarim & Taira - Indonesia
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- San Jose City I Power Corp, Philippines
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Posco Energy - South Korea
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- GMR Energy Limited - India
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- PTC India Limited - India
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- SN Aboitiz Power Inc, Philippines
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Videocon Industries ltd - India
- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- Malabar Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
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